Ryanair

What do your overall assessment of Ryanair’s strategy? Although the strategy of Ryanair seems sound, I don’t expect it to succeed on the Dublin-London route. By matching service and amenities but pricing well below Air Lingus and BA, Ryanair stands to steal customers up to capacity of it’s 44-seat turboprop 4 times a day. This loss of customers, though small at this point, could likely elicit a strong response from both AL and BA. The Dublin-London route represents one of the few lucrative routes and one that both flagship airlines will likely guard intensely. Ryanair’s entry into this route represents a minor loss of revenue in the near term but a potentially major loss of revenue in the future if they expand. In addition, Ryanair’s successful entry could entice other carriers to enter this route, further eroding profits. Air Lingus and BA both stand to lose tremendously if they do not prove there are high barriers to entry for Ryanair and future would-be competitors. Although both BA and Air Lingus stand to lose revenue by matching prices, they are clearly capable of doing this given their prices for advance tickets. Ryanair, by not investing heavily in airplanes or infrastructure for this route, has shown a soft commitment to this route. Air Lingus and BA will likely see this as an opportunity to push them out quickly as they are not heavily invested and will not weather sustained losses to stay on this route. By this logic, I expect BA and Air Lingus to match Ryanair’s prices from the outset, likely removing any advantage Ryanair might have and eliminating any potential customers. With little revenue to show for on a new route, it is not unreasonable to expect that Ryanair would exit. Of course, I don’t necessarily expect that BA’s or Air Lingus’s reaction would be different if Ryanair had invested heavily in the route. However, matching prices would be much more costly as a strategy if there was indictaiton Ryanair would wait out the storm for an extended